Xerox (XRX) 25 Jul 242024 Q2 Earnings call transcript

Welcome to the Xerox Holdings Corporation's Second Quarter 2024 Earnings Release Conference Call. [Operator Instructions] At this time, I'd like to turn the program over to Mr. David Beckel, Vice President and Head of Investor Relations. Please go ahead, sir.

Good morning, everyone. President of Vice Xerox Relations Beckel, Corporation. Holdings David and Investor Head at I'm Xerox Second Executive Holdings Release the to Welcome Corporation hosted Steven Conference Quarter by Bandrowczak, Chief Officer. Call Earnings XXXX Bruno, President Vice Xerox recorded. Executive Chief Holdings He's joined today's and by and Operating call Xavier President request Officer; the Officer. At conference Chief Financial Corporation, Heiss, and of being John is permission of Other are expressed call rebroadcasting the this of recording and/or without prohibited Xerox.

on to the the statements, at be the uncertain. this call, may address materially results available I'd Xerox in that During are to comments which, forward-looking Bandrowczak. future future over are the herein. At nature, web time, like refer and contain slides different meeting Mr. make will their we'll matters to than www.xerox.com/investor that financial expressed turn Actual and are executives that by those

linear for the deliver and and in you organizational XX% processes QX $X.X but above adjusted revenue operating operating morning, end joining period strategic and execute operating to in Good in short of strategy a operating to currency. margin, implementation actual multiyear earnings in our XXXX. Summarizing during validate cash $XXX not adjusted results results billion income income for reinvention quarter, Notable of confidence a disruption thank reposition flow reorganization and revenue the QX. in unfold operations Reinvention of changes in improvement continue levels IT further a million call. Sequential targeted and to model this improvements comprehensive to improvements quarter digital the decreased strategy's the is and by redesigned since the of in our in transformational constant of highest market progress XXXX first according ability the underlying with plan. financial towards implemented the XXXX the magnitude, may simplify print, services rates a changes experienced opportunities in of Xerox fashion. and We growth. With always

an EPS backlog in primarily revenue higher and reinvention, lower revenue fluctuations with the year-over-year business of impact $X.XX, core taxes associated Free Adjusted nonstrategic year-over-year, reduction the cash Excluding was in $X.XX modestly. interest. lower only and reflecting of was XX declined QX And by by to flow due basis year. was offset margin X.X% adjusted lower points increase million cost million, compared year-over-year operating of operating revenue, of $XX $XXX reductions. last to

$XXX Accordingly, realized our confidence freight are reinvention actions, which savings the guidance. incremental an and With target. income the free of expected. Despite cash sales on improvement in back points organizations margin be new income originally simplification, focus than expected on improved the and year reflects year largely XXX improvement bearing improved predominantly outlook us, streamlined are half million including in benefits adjusted higher costs launches results. with basis in financial disruption QX the also marking from flow orders sequential in to expectations, Other a drive the to the firmly year no and income year, are operating behind in processes including stronger more revenue growth operating pipeline, with equipment improved geographic the impacts has expected in Adjusted operating of free revenue cash materializing guidance expected over product an Momentum QX revenue, the year-over-year. impact margin, adjusted the primarily full in guidance in and QX. mitigated XXXX. trajectory lowered to the full now basis The and be XXXX second was the of we operating and reduction are product than time. in half in to of of flow sequentially and grew in offering X-year improved line reduction

decision recently the and to in in sales over and sales confidence the Xerox offering X-year with management the economic detail. I'll to operating initiatives rigor changes the to behind between market of operating in closer the to turn designed were put continue our alignment growth identification and cost the cost now the totaling reinvention improving fact, discuss by and to place guide our timing priorities, grown which million consistency model than has organization outlook the now strategic business the with the XXXX to more catalyze stronger execute XXXX and quarter while of sales $XXX as in the estimation core, more unit-led buyer In quality future QX progress past reduction and reinvention. those we execute in operations our change related share and reductions and framework infrastructure of to Xavier initiatives. Starting will in bringing John the efficiencies. due

offerings higher Services XX large key in QX improvements Sales and administrative out the are We and are target The are giving pipeline the opportunities on settled routes better XXX% print also first similarly QX with optimized seeing market. enhanced and collaboratively above year-over-year. has highest momentum strategies in orders Revenue order segments half digital efficiency continued in of Supplies both team marketing quality continues the client of time evidence burden, more grew both now indicators. success and and and the Equipment has operating accounts models. across our model. last sales, renewal the of reduce quarter and to pricing to team across line and intelligence, to revenue performance bearing new marketing for the design sales early remained strong. that accounts. These coverage through tools fronts, second into teams work specific more both are new and the And sales services. for to the months working rates planning sales improved KPIs focus and year. to top

devices largest internal world's our first and are believe multifunctional lineup, second with product be year-to-date most sales half of device user analyze convert are refreshed AI-based higher is hand-written successful use AX in printers. by save The that optimized benefit what the learning Also applications New time and augmented included The documents. automatically with come rates and features workflows users and notes summarize, modules, algorithms preloaded renewal scan AI-assisted any enable will auto-redact of adaptive business to patterns new improved to a we operations category. clients' which suggesting signings AI ahead targets. The product using the preferences. with lineup

also business as a innovative door document new updated More these applications as service. for processes. intelligent devices AI and solutioning importantly, service most platform, digital between use by serves workflows, critical The looking IT our and combined increasingly the across operating on print document client who are digital differentiated focus a like cases. The change is their AI-enabled to base. Stronger including model expanding with range of teams penetration digital currently brought broader to for opens alignment partners clients solutions traditional for sales AI-assisted increased driving workflow platform Xerox the processing deployed improve cloud-hosted workflow integration and has unit a to product development, Xerox

expanding provide new solution with Our with we home an every client accordingly. In broadband addressable to strategy the customer print for client telecom end-to-end QX, progressing is signed space existing the acquisition in European an market client's of total print service. a deal

The prevention intelligent assists of partner, proprietary greatly are such across unique machine terrorism. using the screening the both optimum artificial signed marketing are for and and media financing involved laundering and our recalibrate by our increased from utilizing the provide activities, incremental AI digits for identify year-to-date, for provide with leveraging XXXX. demand provide fraud marketing relationships demonstrates time. to an improving our clients. Increasingly, we expect strategic automates are AI solutions. We in noncompliant digital of intelligence money to to client help of to we for and and key up response which we and advanced services customer to insurance customer tailwind and digital targets. over with print deal unique client digital workflow executed campaign an our processing advantage solution business utilizing a targeting as solution advanced of for effectiveness integrate services need an leveraging a digital manual print a print we ability digital businesses and our This we and This set campaign existing sell source double the other to growth the new competitive digital as This optimize designed learning, of With intelligence customer client the strategy, quarter, in the data a solutions solutions value business. to data digital document is reducing apply digital omnichannel and to print expand processes solution, ability to in the signing past the a industry risk. The processes detecting in capabilities services to

use headcount associated year-over-year, planned in benefits million reduction largely with ensure future cost decreased and to successful the the delivery improvements. With quarter QX, of the optimize in reflecting initiatives identifying the expense reorganization. cost year: processes and required those headcount prior internal reduction In turned $XX taken strategic AI to the and of nearly behind us, operating developing processes our the to the of Moving actions to focus structural reduction systems initiatives. the this

future hands the progress of one a savings leads is gross GBS Louis delivery more operating He the Chief and Pastor, and the of also $XXX I Business from the design with of Officer, million enables capabilities efficiencies team am or both savings changes than of in leader. made Officer, our structural through our shared organization, the to through Global reinvention his XXXX Service as to Chief key the control XXXX. it of organization. Administrative has pleased Our is GBS, to platforms. identify implementation end-to-end Transformation cost putting continuous

Finally, balanced allocation. capital

flow receivables. income growth delivered This of we year-over-year operating quarter, cash and lower lower sales despite free finance in

expand million. by in by of the fund regions. liquidity enhance and quarter company's debt Balance our future of million reduction advanced improved lease and the this capital ABL the agreement are other flow free through facility reducing which outside originations We will cash the health profile of sheet to in $XXX $XXX talks required expansion forward-flow U.S., to

IT expect both debt. key reduce in a we XXXX. dividend end intend digital Through be sufficient of to payment to cash remains value-accretive reinvention, future and periods priority. We by below per reduce share flow the fund in Xx leverage growth our to free EBITDA $X and of services The

levels will our to to over yield reinvention John as normalized our that dividend provide specific peers, to but hand initiatives. yield we expect update our above return more call execute now an the well we to reinvention. I on Our is fully of

Thank Steve. you,

market opportunities assumptions the with organization, structural spend target cash the levers: to noted, underlining income flow As combined underlying Sequentially available with unlocks more to in made higher X-year towards operating on design, progress QX. X in drive savings time a made markets requires our through The reinvention with to geographic, meet growth sufficient target. I'll fit operating reductions $XXX driven the simplification. we operating model call structural progress and us. organizational operating adjusted less when to planning complexity discussing offering update leverage. I'll while on to primary costs quarter mix for Steve million mechanics growth purpose drive key will which an implementation reducing today's of of the These income reduction complex costs, and start higher structural this expected continuous in will operating reduction in geographic leaner, and require growth favorable and a changes rates, by simplification. be revenue fund in

distribution indirect certain model. leader how an print executing it things: for time currently capabilities direct markets one, allows a focus does to positioned in the shift allocate and This are strategy best serve operations. providing in a which in greater distribute and maintain resources we on within product clients two, We markets a in partners more are to service in direct on shift from digital region; and the being who channel we our X

direct and a quarter, we move an a following model, similar indirect to in in prior in our Chile Ecuador the transitioned This operations Argentina Peru quarter. and from

simplification will those the Eastern across operations updates evaluate and print and growing we'll that to decisions production to with development indirect continue software-enabled more our transition Europe, focus our in profitability. announced this provide greatest Western differentiation of we distribution the and levels production as certain refine narrow optimal to and time over Last are within fastest and a mix competitive We offerings leveraging the optimize quarter, by country the XMPie We as and versus submarkets of of made. Offering our our to our of production did print flow decision exit manufacturing resources put examples. ecosystem, are software the behind services-led to free direct equipment.

discontinued are the ahead operations sale we consolidated products. and globally of remaining of This quarter, plan our in manufacturing

continue have and with gain example of distribution AX our markets partners. alignment One to offerings of to is the we for where opportunity product further specific most We explore rationalizations channel the of clients needs optimization such drive our the closer our channel, share. within to the

discussed productivity gains. simplification the leverage model we As Services technology-enabled efficiencies quarter, Global organization operating and drive long-term to will last Business enterprise-wide

with the cash, a gap implementing associated global over quarter, will technology efforts we savings new years, the that our and our processes, These operations the plan second technology-led the During operations. global mirrors greatly infrastructure XX initiatives These to organization technological making reduce and our us insights greater and flexibility second to to implementing business to to the do people agreements record partners entered allow business across functions, streamline began stack legacy providing GBS process internal next business transform costs of reduce technology And few global within and by the order the help and in key solutions. to with into we business management report, with it including with to enterprise-wide standardize and improvements. agreements expanding easier standardization processes. improve spend IT while quarter, our the accelerate Xerox. Also offerings

win quarter our the of redesign transportation was this Another network.

incremental network, unlocks and continuous office initiatives, transportation initiatives. With identified second including contracts and those in production management thus initiatives XXXX, made erosion further in Our negotiated a the of of certain million in are accountability ability that equipment reinvention are ongoing after system, our by million our to reinvestments progress In adjusted direct accounting distribution, our transportation to far, in key broad-based date, organizational of across And our across shift operating and in the X narrowed successful we through markets indirect operating scale the business potential we now for focus double-digit than of teams these to than through to in Xerox our primary digital our office and to in XXXX, reducing savings and critical savings of a revenue from be structures business end income optimization future XXXX cost comprehensive services reinvention investment savings more confident operating even of core deliver print accompany efficiencies carrier the derive XXX more $XXX $XXX as coming cost free the growth to the margins has cash and the of a our implemented IT reinvest enter the over call over These we realization cost reinvention efficiencies. of periods. resulting costs and of expect transformed higher-growth chain with and to growing businesses. When savings categories. change Xavier. enablers we opportunities. I'll supply ensure management economies and XX% gross organic flow momentum hand quarter, operating levels the from identification businesses disciplines in new the and inorganic

everyone. morning, good and John, you, Thank

associated profit, with cash financial cash benefit operating despite all from year-over-year lower adjusted year's improved free while in income currency. flow receivables XX% operating results. In QX, finance and materializing margin, mentioned, sequentially, in this are and declined revenue As adjusted improved the contribution actual activity. Total constant free Steve flow revenue organizational redesign a

improvement of from Excluding basis more in revenue of QX. nonstrategic XXXX fluctuation, other this first below a quarter due than the revenue the reinvention currency, in quarter actions, point our first expectations, effect in performance. X% the total constant backlog declined XXX revenue and Core to mainly half reduction was

will in sales earlier, year. continued the and momentum us and activity the in continued grow in product half reported second supported new revenue operations, give confidence improvement equipment by noted signings of the both strength pipeline Steve core increased orders in However, and launches

Adjusted the X.X% exit structural in Similar operations. overhead and impact. headcount cost declined to the of due $XX reduction by operating lower declined margin gross reflecting incurred close QX, reductions. Total by labor operating in reduction associated offset manufacturing and XX%, year-over-year Turning this in million higher expenses actions Adjusted were mainly volume to million commentary reductions or charge in benefit lower revenue year. mix. profit, All expense prior year-over-year profitability. production activities. we to profitability of an basis with of effects costs, QX, inventory to the associated to other freight taken non-finance to favorable the partially certain net higher no interest QX flow-through Gross points exclude our year-over-year, countered cost XX increase with year-over-year to basis in $XX implemented due points on expense XX of refinancing partially declined due debt recent currency print margin follow

of increased higher lower rates of our interest year-over-year, expense portion finance being financing significantly in driven count. This EPS our was result interest year in with Adjusted lower certain period. GAAP to PARC tax $XX to non-finance than debt receivable rate the of While balance a balances the not by quarter lower quarter is $X.XX per after-tax tax the allocated $X.XX business, rate donation XX% is higher a to lower year-over-year $X.XX associated year the audit. year-over-year. Adjusted helped of settling XX.X% operating partially million due and prior included expense in EPS debt rate share. tax share reflecting higher by increase prior compare a tax of rate, $X.XX was year, adjusted interest second of prior the tax net higher $X.XX charge a higher a income, and as lower the of non-U.S.

backlog revenue for reinvention around equipment decline. revenue. on geo constant year $XXX to current in fluctuation compared in cash On QX. a accounted XX% an declined and QX action, of more and currency of simplification flow now roughly including million decline with actual year-over-year Starting of the The me sales XX% and prior most review detail. Let effect basis, the in

increase intended refreshed the our AX relative product an offering equipment pipeline, our teams which backlog improvement mix. by due period momentum and year. will in reflect return and benefit growth of a in outpaced sales and in was the equipment capabilities lineup QX, of declined disruption on sales quarter in consistent second a slight in order mainly unfavorable improvement buyer in for backlog. reduction continuous range period confidence compares, of to half sales actual QX, a the tailwind current declined to modestly, the After alignment X% product quarter, in prior decline closer QX. Post in Excluding providing again of velocity Order revenue backlog product. Easier this $X.X a brief featuring outpaced reflecting revenue QX installation have AI-enabled give approximately activity sales in installation in installations equipment and and to reorganization. revenue to us we currency. negatively this the revenue activity between decline economic equipment seen affected constant the in activity Equipment billion of a Decline of effect, order

Excluding endpoint businesses, geo revenue, trends commentary will the nonstrategic in reinvention and with reduction IT past which underlying actions. our quarter, fluctuation provide and backlog in declined help device sales core paper to I other in placement modestly. Consistent excludes reduction simplification, reinvention nonstrategic effect additional clarify lower-margin including post actions, of revenue and the including

XXX the fluctuation decline contributed prior revenue. of current QX, For year-over-year year the to effect equipment around the and total in backlog in basis points quarters

contributed basis XXX Additionally, decline decline. to in change sales in IT nonstrategic strategy of revenue, the receivable more device paper, finance points finance lower our than reflecting endpoint and the

in printed services profitability, impacts decline and growth contributed our partially business and simplify other simplification well low by revenue these including reflecting actions primarily the in single-digit, IT around as balanced as decline. When strategic removed, declined in supplies. managed to volume, geographic page basis digital Finally, points are XXX improve growth to

growth when both the year, revenue on half For and actions. basis reinvention the we expect adjusted a for of reported second

receivables. Working the was cash review quarter. year-over-year. million capital than million working Free million year $XXX higher $XXX flow by by flow of Operating $XXX timing cash cash by million large prior activities prior flow. of were now $XX onetime benefit, cash in improvement, which was mainly paydown finance the from was source to of driven consumed use of activity of the in the debt Let's year-over-year along The million of QX, QX, receivable, million profit, the a the $X Finance cash in $XXX the $XX partially of assets payment flow with counterbalanced source prior $XX of program included by XXXX of $XXX increase finance million higher a with $XX origination Investing million capital lower notes, were mainly unsecured of associated our adjusted was of sales secured a of use dividend $XXX higher Financing a of million, consistent accounts forward contribution. benefit cash driven lower quarter, cash lower and restructuring HPS higher $XXX a year payable. million, and pension reflecting on the largely with reinvention year-over-year. operating cash reflecting million, remaining of year $XXX senior compares million. This quarter. million, payments a

finance Turning funding Finance in reflecting actual return Xerox XFS of sequentially XX% volume toward XFS financing existing change receivable sales balance HPS currency XFS year-over-year, finance U.S. run-up receivable Services origination. to XFS X% the on solution. due origination focus in on to XFS segment. origination strategy declined of on its or captive-only declined to

$X due to $X on Other for efficiencies. was expense, by bad quarter, lower year-over-year driven lower Other the reasons revenue, cost asset. sales flow in our XX% mainly equipment decline lower reflecting other XFS billion fees by declined profit higher to to debt free XFS finance cash structural lower receivable the previously and by we was year-over-year, fell balance XXXX, year-over-year to balance. Print expect balance, lower the revenue receivable versus due XFS origination sales million partially and million revenue highlighted, in normalize segment in closer mentioned. continue from segment associated finance As QX period. In lower revenue year and XX% Print to and $XX QX, the offset of finance with benefiting offset partially receivable profit by receivable finance previously finance to the down decline future QX commissions post and prior due income higher

of finance Turning business. ended a with $X secured million support of cash, note. loan $X.X billion and to $X.X borrowing, senior and term asset QX Total convertible remaining cash the unsecured of debt finance the structure. to capital the billion consists $XXX restricted around our billion with debt outstanding attributable debt of cash. We of receivable, Around non-financing bond, remaining equivalents our

During quarter, the the million XXXX second we repaid of $XXX remaining note. senior

a have of million coming balance only year. in result, of As we secured $XX due debt the the

addressing of through Before guidance, or expected of to behind are initiatives than the In run cost in million implementing close reinvention. more gross details million XXXX. that savings to additional $XXX want implemented gross I the provide we cost savings and date rate have identified $XXX to year, are more to past through than result

We to And in around work geographic million savings XXXX. XXXX will to and associated $XXX through and more realized that additional of with savings simplification opportunity. including continues $XXX XXXX, bringing to offering date, our than opportunity overhead estimated savings total additional identify implemented million gross be have identified cost savings and

million close implemented already in XXXX realize to cost projects savings of $XXX to have sight be implemented currently either savings of shortly. of to those that million gross expect from We nearly or will and $XXX line XXXX in

from realize investors implementation. to savings and of through in yet the initiatives as each stages expect not quarter implemented, additional move we we'll XXXX projects We update

$XXX million XXXX expect of income income above end cost us share, operating XXXX. structural is operating XXXX, XXXX to $X reached target by ability of grow XXXX the identification adjusted free levels than our and put the than planned, cash $X.X least of per assuming in of context, progress more $XXX improvement from this EPS expected million adjusted noted, confidence our flow to to billion. date in north To in give more adjusted income EBITDA we operating John as in reduction cumulative of at As

will XXXX I Finally, address guidance. full year

associated simplification reduction a a attributable to revenue, the to to we exit constant revenue prior X% intentional geographic endpoint reduction print simplification. revenue X% decision The financing the actions, in IT the and production including of other For income X% X% versus the nonrecurring manufacturing of devices. Full XXX including in year, geographic in revenue on offering and currency and previously. equipment nonstrategic guidance to certain decline include is entirety headwinds in revenue incremental of now hardware lower-than-expected year points from reduction low-margin backlog reduction basis now guidance reinvention revenue, effect nonstrategic in decline from action, expect of of with

item, expectation unchanged this for XXXX of effect cumulative revenue core in roughly business at year-over-year. is flat the Excluding

We expect half the our increase print and which second on services. and a of in growth year revenue in managed reflects improvement the digital reported IT both to continued core and basis, in business

as our a including X.X% freight For of and actions lower income operating margin, offering margin mainly now reduction expect of we least the least effect adjusted at reflects outlook of versus prior guidance, at as simplification This well X.X%. product geographic revenue higher-than-expected and cost.

to improve those associated and offering expected Over margin. and total simplification the course such profitability with of reinvention, reduction revenue are as geographic in nonstrategic

action overhead in action cost until not associated will be XXXX, this benefit reduction associated realized XXXX geographic with delaying implemented expected many the the net However, in savings with XXXX. simplification to be to

reduction expect free to of income months, initiatives recent prior identification reduction cash now increased income free and contemplated. We cost delivery cash to versus million leveraging the managerial after-tax operating strong currently least the reduction at The adjusted in X-year million. with support despite XXXX the in in noted, flow at operating infrastructure flow reduction in is guidance objective in just adjusted a Steven our guidance, $XXX line improvement least has of $XXX of expectation. As confidence

by service results in we over restructuring and the of guidance the ability with million actions confident our $XXX income expect to improvement year-over-year our now level incremental a in equipment in of for guidance action and $XXX line by momentum adjusted flow supported summary, reinvention a the XXXX. of at million drove around management our inclusive year view The payment now cash to reinvention system year. of of Q&A. operating free in of business top growth team timing delivering full to million of grow pension growing reminder, this for XXXX, a reflects $XX and the return the and is operating of this a payment. In operating XXXX remain model and in sequential open expected recent incremental As expected the change by end successful second product our taken to We half demand quarter, XXXX; in capable of mainly new observable and support in reduction launch the Xerox. We'll our benefit least line

And Loop comes Ananda of today our from Baruah the question for from line first Capital.

where being about could. reinvention initiatives and the impact that the Xavier, more of the some moved then XX have initiative if you're around the intra-quarter? but right are the the And of timing initiatives, that's the you just Or it up the Is just picking follow-up. couple, you And impact? guys a learning You lower. the the initiatives the in of catalyst relatively causing timing talked about guidance last ago, of I A for talked same? what's a the days I is quick moment

Yes.

So thanks, Ananda, there.

and so yes, each go mentioned of with strategy, as here. into the -- So assess you individually we there. as the the we we And are plan executing it, initiatives strategy

guidance for As entire have that have it, the we not program. we you know changed the

X-year that the with guidance we we So have stick there.

and you look it for offering guidance specific this is here. the reinvention action, the guidance change, revenue if specifically simplification related at entirely Regarding year, to the geo

that an you our overhead. in indirect comes impacted, we we of of have margin move decline, look like at [ behaving If when is situation flatty geo point the to the also guidance. and The you as And exclude you are simply this, of country It's but it's the certain an view, we you action. timing revenue here, the business are a cost in simplification out mentioned the immediately cost it, core a from sticking from modest like model taking a corporate of expecting. program I ] timing executed impact and give of the operating we the profit it even as are is then overall as just can what the X-year you expecting view, direct do example. action and When is point action a line you the revenue. From base to point. are the of

Steve. it's Ananda,

Just quick a reminder. real

the large XXXX. changes to we of early going back One about make that very structural talked we things to is had

So with in XRCC, manufacturing, now FITTLE operating if a of beginning production implementing did we're model $XXX the is what that activities geo, think incremental in drive with did about the of it an what basket what adjusted. improvement with you PARC, we end year, what doing did and change, we operating we that million

things deliver end with are the with There I able think that we quarterly that we've to we to the happens not approval to return, you a When about is to drives going enough want us in to results. that the And are what what approval in what not linear, regulatory of a but geo every happens bucket what simplification, what deal. that want control. we're labor, country, to out get bucket need that so that is talk got about makes you for confident happens this action things our with drives be meaning do. the And do

not plan what's are and up a exactly you in these quarter. straight So happen know can the to going you where set

that over the to years, with the feel next financial deliver, we that exact we're X talking we're can However, confident going results about. bucket, that

next line from of And Samik Chatterjee our JPMorgan. question from comes the

on you sort with heard but that question following can up I largely of I on start if XQ were timing you revenues Ananda off here. if partly I in correct. line, So that say had, the heard the

is in rebasing So lowered first rather year, half of my half? second about change, think the timing? the in that when the Is the to second half about XQ? second [ we this ] than half versus more in or of How question second should incremental it be going full roughly terms impact portion we is, guide for X.X think the primarily the sort half

go back So X timing-wise, on to so QX detail quarter a the here. little to just the in impact and give more bit

So if decline that XX%, at we mentioned. all revenue total impacts our including was you look the

backlog. mentioned clarity Now our this come from on points to give is of XXX more we basis what have in impact script there

backlog remember, because backlog. last very you were strong year if flushing was So year-over-year we

And If are second impact about we'll growth won't there. mode this second in is a this the think why we reason the half, you anymore. have saying be we half,

related to The was XXX points. second point basis

agreement, to and flow points lastly, geo we paper, nonstrategic points related endpoint on end additional to which of basis what backlog, the related XXX call generated the revenue, some was XXX less forward So related and there. offering devices XXX to simplification income And basis simplification. has interest

there, all backlog So second the the but time, anymore. flush now, same at the you When driven won't decline, explained rationally you so this look half you have of and revenue XX% action take a XXX are by this into here.

revenue. and why backlog the this us during half confidence the still for look commented and us geo that nonstrategic there, when of to But ability apply at drive second the year. still And in half the impact second decision you on flush revenue simplification is revenue this we'll equipment will growth we the the our drive continue. will year, We give the reason the

I'll between below Xavier, what QX in that, just more I sense, sort is to account trying and is, incremental consensus to of coming on did an the And Okay. guess you that impact in do -- to intra-quarter? in of changes be the rephrase in get -- -- second before have it I'm is that the the my incrementally decided these incremental like, more And revenue deals in like revenue of to waiting full half or in really the you're for follow-on, maybe for you finalized just year more guide. secondly, is account from guide seems for the them impact changes? revenues

you of the there's these of in some that in do we deals want how exit pipeline So confidence geographies of year? terms to more subsequently which sort in the no get

Yes.

answer will the I question. So first

[ here actions investor it, account out. will here. offering doing So on with the have geo said because some action are every was we we time the of think consensus simplification, consensus, taking we This XXX ] related them call don't invite is and points we to what as the basis into I the

second but additional play the Now here. major are regarding as it inform the we the significant we as are at during there, we earnings vast here. And on half, already executing second calls. describe I the investors action the plan our during won't half we of some actions second majority, strategy are or will point say the if there

fair question the lower very of learnings to we answer give actually -- gave mix, us opposite. at to timing low It's disciplined the regard us of and something what's point. think guide sequence gives year our and of the geographies We're -- the it's that, halfway to sequencing, point balanced deals mix shift it pacing, it execution also about looking the products in I deals your good and that directly. but things And mix not across the part a to in not offerings. we and both the we're kind all And year, about the some with them. John, think the as if back very concerned look to there's hardware. profitable a mix is the and It just and do I it's end pipeline and at do QX some the and exit the of areas the us through QX, geographic of that think information add only of and we're it's the because that pace the of of in types revenue just the the the types we're being that and I of how

definitely is timing a a and issue. So it mix

from And Woodring comes Erik of our the Morgan next line Stanley. from question

Maya on is for Erik. This

services a of to base today, think to maybe less that and million let's revenue it's I $XXX around being $XXX start, million So about, $X roughly. billion annual just revenue roughly say, if than means with XX% we think

Meaning, can about should in how telling help. think than your Or we you years? double Any services revenue mix total about revenue what's us that color are point? will base is that that? to going your XXXX, but thinking by You assumption more about at X double be

both. I combination of think it's a

items that, there do to We the having has broad-based IT asset yes, very really brand see upgrades. with IT business So space. We're services same offset growth And growth about because our very in of print. seeing for our good services, We're time the absolutely period recognized. over with you on on shared services as in we've that an Those the opportunity, think business dealing declines we one, you are across that a very technological think good is part similar the they're digital big but by issues conversations market And with in that a of mature. services, well is us. lots customers. of not as in services have middle the business SMB our environments

sure enterprise print in production, the both to get So and we we the low on in end. make want right that the mix

shift them increase you production. services, position us print driving our between our ability you'll mix digital these them. At IT invest in, it low-end And them So and shift the see the AX and themselves time. we're to that ensuring is gives offers of that to whole point within that's the AX, a an the mix services our does time, and how -- portfolio of our geographies same and we through our getting see will this how grow we're in over offers the we savings changes the

program growing the correctly -- it as both about a yes, kind a and it's regard of Xavier its time very multiyear Steve with to. to declines it's the by of in why that's and it's complex nature, are But over yes, thinking offsetting you So business print. out period services pointed

Yes.

the want I On there. -- to just also highlight

QX like is look that you trend? doing, there. will QX significant be line know are decline but our be starting driving and view should So and say, are mode are we here, half, at revenue the not when a different okay, revenue, QX, we will that you at there, taking We do we when we or is compare. the revenue positive. on flush you you so backlog why last actions future will like into more second year, that QX this the the we reason for look on outcome And both forget compare, apples-to-apples had we adjusted this double-digit And the all saying, strategic is the revenue if different be of we that's a growth the also, that that account it

first not backlog an the should So forget, half. the impact year, we in had last

That's to it. remember. helpful Got

should growth kind your the about to business kind we a services, regular of we IT being and when looking this a of at services guess, that out? digital And you become breaking talk so, part I expect are of business, disclosures? When significant

Yes.

most is of This a one the So from we good have demanded question this is investors here. question.

our next year, company to segments. of the would present in results is plan like we So so beginning at X far the

required on us we one But digital and much core we to I'm for reporting on so work so print better this X clearly this businesses. this working the it's would other services. be IT are of understand businesses. So is not that understanding compliant will and area committing one be and because hydraulics to print One be currently, ] we we requirement. these [ the a requirement with between can have reporting a the X

spending or have or question. Got heard intentions one the internally. supply in about or different caused Do it. a could being few And you We've customer shortages last an taking impact product some I think just partner actions this even channel have potential by then you're potentially reinvention checks on purchase and behavior?

No, We've supply with and internal we don't. shortages. no got issues

and So fine inventory, where from. fine we're supply. it's with know We're coming I with don't

issue. It's not an

Citigroup. line from the Merchant Asiya from comes question next of our And

Great.

improvements it's level, Just revenue 'XX? you about And talked of high market and are the in wanted drivers there, extent you what into guys revenues operational vertical? thinking that to -- that? But IT that [indiscernible], next is growth geographical, could are declines, trajectory dig a own whether over And of you at your are to X-year those? digital mid-market. opportunities, on you terms period, present where can are growth If seeing I I double-click those which discussed. the it's that on whether in share if position success this areas you the you've know within of kind services, which double-click are the the about guys print how guess, what's about I already I you post thinking market

And you if bit to would to that in would there, could growth double-click just So order that, that great. little operational be you great. as well, double-click you need the drive that be could a do lastly, that if on investments on

Yes. Great question.

as been Let talking strategy, as with we've the about me reinvention. part start whole of the

mid-market great all, mid-market able us, they to it. absorb specifically First for inside opportunity new flow, existing clients document whether RPA, being accounts embed that lot intelligent at believe AI, looking TAM we of clients IT the existing do and and our is helping very it's of a of services in a and how technology,

bring So that we're products perfectly to able trusted and as be offerings. partner a positioned we're to seeing ecosystem services, and in our that across

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where opening you and around that's services, highlighted do saw some you of talk about we from that our clients. John, to some doing we're things the that So get the want in that's we where comments things the specifics?

Yes, for sure, Steve.

in X services -- to like digital So you I'd about if think ways.

that of all look things ] be ingested the they process in PDFs are automation streams types larger are the and clients just formats, of more space [ in of all a scanning For and like large via printed, that's of efficient. advancements space. that kind much helping play And that and is of all robotic handling of the more both types enterprise at that processing, invoice the that X things invoice and their work from accuracy, clients,

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chain understand items. these of across to need You custody

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emerge because place in opportunity we the the that seeing around large really geographically and digital cloud these fragmented. NFL put That's SMB us more U.S. like that's very security where So market the see that's managed it's will, It's we're need. things it And services. for where an very managed the cities, you highly market IT our print, believe if we in than in types IT those of services like is managed just And things.

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so And those balancing how we're issues. that's

-- to extent overall just in, the what to extent print income just about print I operational market? mean, speaking improvement the And broader is secular market? Okay. what what your in challenges

Yes.

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across X the main those of in pillars. secular market, at in is So challenged you categories If right? refactoring our broadly, look offers our program it that positions means share each a a gain more X

grow the our it's creating market in indirect offerings share that and AX and low space in end our in the in through position mostly So channels. our a more expanding opportunities

products, tied and gain build capabilities you higher channel-ready across we As mix program. share want are this a at velocity we our at our look more and geo look portfolio, AX shift strategies, to that's and together, these

why enhancements, surrounding a that we leader competitive make to continue are areas the to to hold direct, to in value-added production That's that print. And want leader. enhance That's then that differentiate. space space. it the market hear in places That's we AX. in We are and be are that. share AI we're break about growing the and the which the AX more focus of are is talking a that there's that on we we're leader because in we're on continue why the production protect continue parts market reshaping and all services down, and if you to This and those and sure the side, you issues

money items for them. for that You large see making critically making are presses, really post-press and ecosystem. is labels the clients complex the efficiently run cut-sheet pre-press, These inkjet, all the because productivity we presses more Down see specialty and aren't surrounds all production and our the important. machines run-time optimization

So you're services. program share our want seeing That's gain advancements on a it's side. to and software in why We software-enabled services-led the there.

these very practical. to We them to We are shops embedded to have still capabilities there, inside much clients customers productivity that print the and is lot or laggard, a more stuff a print these digital of we're large analog tools, divide as bring more enterprises making want which we're the sure help bringing to our make print that processes.

end, surround it's production entering segments been it's gain and low market's strengthen for categories. new the in it where each to it's previously. main been portfolio the the has versus our where in X we've in and and different So of It's and hold where the moving mid by repositioning

the Bandrowczak program. any further for of conclude the hand This to I'd does program question-and-answer back session to like remarks. Steve today's

operating QX The to call, effectiveness. million resulted results structural driving improvements $XXX notable of today's call, great short confidence XXXX. I cost improvements disruption will you changes are adjusted efficiencies targeted reinvention the underlying everybody sequential Recapping operating but of earnings in designed improvement thank is the sales and for in us financial a in I day. enable observed joining reductions in end the the QX future a in by wish strategy improvement QX implemented and in income period of and in processes working deliver and gives

you, your conference. does the in program. and This today's ladies for Thank gentlemen, conclude participation

may You Good disconnect. now day.